April 4th, 2011 Newsletter

Dear Friends,  Thanks everyone for all your kind messages and e-mails.  I am deeply touched and very grateful.

Martin Luther King was assassinated on this day in 1968.  Joanna  Slater writes in today’s Globe & Mail, “The shot rang out on a spring evening in Memphis, Tenn.  Martin Luther King Jr. had stepped onto a balcony of the Lorraine Motel, heading to dinner with friends.  An hour later, the legendary civil-rights leader and winner of the Nobel Peace Prize was dead at the age of 39, gunned down by an escaped felon named James Earl Ray.  King had survived previous attempts on his life, but in an eerie way appeared to anticipate this one. The night before, in a speech that would haunt his heartbroken supporters, he talked of glimpsing a better future he might not live to see.  ‘I may not get there with you,’ he said.  ‘but I want you to know tonight, that we, as a people will get to the Promised Land.’”

This is an adorable story:

LONG-DISTANCE MOTHERING

“On a recent Sunday in Rome, Daniela Varano and some friends lunched on eggplant parmesan whipped up by the 33-year old publicist’s mother,”  The Wall Street Journal says.  “Mon, meanwhile, was 500 miles away in Bovalino, a small town in southern Italy.  Despite the distance, she does what it takes to spoil her grown daughter with home-cooked fare….Like thousands of other mammas across the southern Italian region of Calabria, she relies on Domenico Martino, a 39-year-old truck driver who has made a career of ferrying lasagnas, raviolis and other traditional dishes over long distances….While Mr. Martino only serves Rome, a wave of other trucks depart each week from Calabria to cities across the rest of Italy.”

photos of the day

April 4, 2011

A goose wearing an ‘identification card’ around its neck walks down a hutong (small alley) next to its owner in central Beijing. The goose is a regular sight in the alley since it goes for a walk each morning with it’s owner who adopted the stray goose a few years ago. David Gray/Reuters

A duck swims through fallen cherry blossom petals on the Tidal Basin in Washington during the 2011 National Cherry Blossom Festival.

Carolyn Kaster/AP

Market Commentary:

Canada

By Matt Walcoff

April 4 (Bloomberg) — Canadian stocks rose for a fifth day after Minmetals Resources Ltd. said it will offer to buy Equinox Minerals Ltd. and precious metals, oil and agricultural futures gained.

Equinox, which mines copper in Africa, surged 32 percent after Minmetals said it will bid C$7 a share in cash for the company. Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, increased 2.5 percent as corn and wheat advanced on concerns wet weather will delay planting in the northern U.S. Silver reseller Silver Wheaton Corp. rallied 3.3 percent after Italy rejected a reported cease-fire proposal by Libyan ruler Muammar Qaddafi.

The Standard & Poor’s/TSX Composite Index climbed 88.2 points, or 0.6 percent, to a one-month high of 14,218.35.

“When mergers and acquisitions start happening, it happens in a flurry,” said Todd Johnson, who helps oversee about C$255 million ($263 million) as a money manager at BCV Asset Management in Winnipeg, Manitoba. “China’s still interested in those types of resources, and they’re proving it with a bid for Equinox.”

The equity benchmark is experiencing its longest streak of gains since Dec. 6 as the U.S. unemployment rate declined to a two-year low and Valeant Pharmaceuticals International Inc. launched a takeover bid for Cephalon Inc. The index ended March with its ninth-straight positive monthly return including dividends, the longest streak in 27 years.

Minmetals, a unit of state-owned metals trader China Minmetals Group, said it would offer C$6.3 billion for Equinox.

The bid would require that Equinox give up its own unsolicited attempt to take over Lundin Mining Corp., for which Equinox has offered C$4.8 million.

Equinox soared 32 percent to a record C$7.55. Lundin lost 4 percent from a 34-month high to C$8.

Other copper producers advanced as an index of base-metals and coal producers increased 6.1 percent, the most since May 10.

First Quantum Minerals Ltd., the country’s second-largest publicly traded copper producer, climbed 5.8 percent to a record C$137.45. Mercator Minerals Ltd., which mines copper and molybdenum in Arizona, jumped 6.5 percent to C$3.59 after reporting record copper production for March. Quadra FNX Mining Ltd. rose 6.9 percent to C$14.35.

Teck Resources Ltd., Canada’s largest base-metals and coal producer, increased 7.5 percent, the most in 10 months, to C$55.07 after Cliff Hale-Sanders, an analyst at Cormark Securities Inc., named it a “top pick.”

Fertilizer producers rallied as corn and wheat futures gained 3.3 percent and 4 percent, respectively. Potash Corp. climbed 2.5 percent to C$59.48. Agrium Inc., which sells nutrients, pesticides and seeds to farmers, rose 3.2 percent to C$92.22.

Gold and silver advanced as the Libyan conflict and European debt concerns encouraged investors to buy hard assets.

Yields on Portuguese debt increased for an 11th day today. On April 1, Fitch Ratings cut its view on the country’s long-term debt to “BBB-” from “A-.”

Silver Wheaton rallied 3.3 percent to C$42.71. Barrick Gold Corp., the world’s largest gold producer, climbed 0.7 percent to C$49.78.

First Majestic Silver Corp., which mines in Mexico, gained 9.2 percent to C$22.77, extending a record, after Andrew Kaip, an analyst at Bank of Montreal, raised his rating on the shares to “outperform” from “market perform.”

Richfield Ventures Corp., which explores for gold in British Columbia, surged 25 percent to a record C$9.92 after agreeing to be bought by New Gold Inc. for C$550 million in shares. New Gold, which mines in Mexico, the U.S. and Australia, fell 3.8 percent to C$10.83.

S&P/TSX energy stocks advanced for a fifth day as oil rose to a 30-month high. Suncor Energy Inc., Canada’s biggest oil and gas producer, climbed 1 percent to C$44.03. Enbridge Inc., the country’s largest pipeline company, rose 0.9 percent to C$60.72, a record. Natural gas producer Trilogy Energy Corp. increased 5 percent to C$21.41, the highest since April 2006.

Petrominerales Ltd., which produces oil and gas in Colombia, sank 4.6 percent to C$35 after releasing first-quarter production totals that trailed the forecasts of Alex Klein, an analyst at Dundee Securities Ltd.

Westport Innovations Inc., which makes natural-gas engines, gained 7.9 percent to C$25.01 after soaring 26 percent last week. Supporters of natural-gas-fueled vehicles plan in the U.S.

Congress plan to introduce a bill on April 6 that would offer tax credits for them.

US

By Rita Nazareth

April 4 (Bloomberg) — Most U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a second day, as optimism about takeovers outweighed a drop in technology shares following a report showing lower chip sales.

Freeport-McMoRan Copper & Gold Inc. rose 1.3 percent after Minmetals Resources Ltd. offered to buy Perth-based Equinox Minerals Ltd. for about $6.5 billion. Molycorp Inc. jumped 12 percent as the owner of the largest rare-earth deposit outside China bought most of a European producer. Hewlett-Packard Co. and Intel Corp. retreated more than 1.1 percent after the Semiconductor Industry Association said global three-month average chip sales dropped 1.1 percent.

More than five stocks rose for every four that fell on U.S. exchanges at 4 p.m. in New York. The S&P 500 advanced less than 0.1 percent to 1,332.87. The Dow Jones Industrial Average added 23.31 points, or 0.2 percent, to 12,400.03 today.

“M&A activity has been reasonably strong,” said Peter Jankovskis, who helps manage about $2.7 billion at Oakbrook Investments in Lisle, Illinois. “People look at that as a sign of confidence. It’s an indication that stocks are undervalued.

In addition, the U.S. economy is on fairly strong footing. That all provides support for the stock market.”

The S&P 500 has risen 6 percent in 2011 as government stimulus measures, higher-than-estimated earnings and corporate takeovers boosted investors’ optimism. There have been 6,241 deals announced globally this year, totaling $642.6 billion, a 27 percent increase from the $506.5 billion in the same period in 2010, according to data compiled by Bloomberg.

The index had fallen as much as 6.4 percent from this year’s high on Feb. 18 as concern grew about Japan’s nuclear crisis and uprisings in the Middle East and northern Africa.

A gauge of raw-materials companies rallied 0.7 percent today, the most in the S&P 500 within 10 industries. Freeport- McMoRan, the world’s largest publicly traded copper producer, gained 1.3 percent to $55.77.

Minmetals, the Hong Kong unit of China’s biggest metals trader, made an unsolicited offer of about C$6.3 billion ($6.5 billion) in cash for Equinox Minerals Ltd., to gain control of Africa’s largest copper mine. Minmetals bid C$7 a share, 23 percent more than Perth-based Equinox’s closing price in Toronto on April 1, the Hong Kong-based company said.

Molycorp jumped 12 percent to $66.41. The owner of the largest rare-earth deposit outside China acquired 90 percent of Estonia-based AS Silmet for about $89 million in cash and stock to double its processing capacity and expand into Europe.

Pfizer Inc. increased 0.8 percent to $20.54. The world’s biggest drugmaker agreed to sell its Capsugel manufacturing unit to KKR & Co. for $2.38 billion in an effort to focus on its higher-profit business developing new medicines.

Epicor Software Corp. jumped 12 percent to $12.56, the highest price since February 2008. The supplier of business programs said it agreed to be acquired by funds advised by Apax Partners for $12.50 a share in cash.

“CEOS are spending money, they’re buying back their stock, they’re investing for the future through capex and M&A,” said Jonathan Golub, chief U.S. equity strategist at UBS AG. “We’re at all-time record cash. Companies are returning boatloads not only through M&A, buybacks are back in an enormous way. We’re probably half way through that cycle.”

Ford Motor Co. gained 2.6 percent to $15.55. The automaker rose was raised to “neutral” from “underperform” at Credit Suisse Group AG, which said first-quarter earnings could lift stock prices. Ford is estimated to release results on April 27.

A gauge of technology companies dropped 0.5 percent, the biggest decline in the S&P 500 within 10 industries. The three- month average for global chip sales was $25.5 billion in February, down 1.1 percent from the prior month, the Semiconductor Industry Association said.

Intel, the world’s largest chipmaker, fell 1.2 percent to $19.49. Hewlett-Packard, the biggest computer maker, slumped 1.6 percent to $40.34. Nvidia Corp., a maker of graphics chips, slumped 3.6 percent to $17.55.

Chipmakers rallied after the 4 p.m. close of U.S. exchanges as Texas Instruments Inc., the second-largest U.S. chipmaker, agreed to buy National Semiconductor Corp. for about $6.5 billion, its biggest acquisition as it expands its leadership in analog semiconductors.

The Semiconductor HOLDRs Trust, an exchange-traded fund, gained 3 percent to $34.82 at 5:14 p.m. National Semiconductor surged 72 percent to $24.27. Texas Instruments declined 2.1 percent to $33.41.

The biggest increase in profits in more than a century is telling investors that this is no time to sell stocks, even after the S&P 500 almost doubled from its March 2009 low.

S&P 500 earnings are poised to surpass the 2007 peak of $90 a share in the third quarter after surging from $7 in March 2009, the quickest recovery since at least 1900, according to data from S&P and Yale University’s Robert Shiller compiled by Bloomberg. The gap between projected 12-month profits and average earnings over the last 10 years is set to widen the most since 1951, the data show.

“People are more comfortable with the recovery than at any time over the last couple of years,” said Doug Ramsey, the Minneapolis-based director of research at Leuthold Group, which oversees $3.9 billion and recommended buying equities four days before the bull market started. “That’s typically when retail investors regain courage,” and may spur a rise of up to 25 percent in the S&P 500 during the next 18 months, he said.

Have a wonderful evening everyone.

Be magnificent!

All of our selfish impulses, all of our personal desires, obscure our true vision of the soul,

as they only point out our shabby ego.  When we are aware of our soul,

we perceive the inner life that surpasses our ego

and that has profound affinities with the Whole.

-Rabindranath Tagore, 1861-1901

As ever,

Carolann

Everybody needs his memories.  They keep the wolf of insignificance from the door. -Saul Bellow, 1915-2005

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